Keywords: luxury, status, conspicuous consumption, brand prominence, branding, reference groups, associative/ dissociative motives, counterfeit goods Young Jee Han is a doctoral student
Trang 1Young Jee Han, Joseph C Nunes, & Xavier Drèze
Signaling Status with Luxury Goods:
The Role of Brand Prominence
This research introduces “brand prominence,” a construct reflecting the conspicuousness of a brand’s mark or logo
on a product The authors propose a taxonomy that assigns consumers to one of four groups according to their wealth and need for status, and they demonstrate how each group’s preference for conspicuously or inconspicuously branded luxury goods corresponds predictably with their desire to associate or dissociate with members of their own and other groups Wealthy consumers low in need for status want to associate with their own kind and pay a premium for quiet goods only they can recognize Wealthy consumers high in need for status use loud luxury goods to signal to the less affluent that they are not one of them Those who are high in need for status but cannot afford true luxury use loud counterfeits to emulate those they recognize to be wealthy Field experiments along with analysis of market data (including counterfeits) support the proposed model of status signaling using brand prominence
Keywords: luxury, status, conspicuous consumption, brand prominence, branding, reference groups, associative/
dissociative motives, counterfeit goods
Young Jee Han is a doctoral student in Marketing (e-mail:
YoungJee.Han.2011@marshall.usc.edu), and Joseph C Nunes is
Associ-ate Professor of Marketing (e-mail: jnunes@marshall.usc.edu), Marshall
School of Business, University of Southern California Xavier Drèze is
Associate Professor of Marketing, Anderson School of Management,
Uni-versity of California, Los Angeles (e-mail: xavier.dreze@anderson.ucla.
edu) This research emerged as part of the first author’s dissertation The
authors thank the Marketing Science Institute for its generous assistance
in funding this research They also thank Claritas for providing the data.
They are indebted to Vincent Bastien, former chief executive officer of
Louis Vuitton, for the time he spent critiquing the framework.
The basis on which good repute in any highly organized
industrial community ultimately rests is pecuniary
strength; and the means of showing pecuniary strength,
and so of gaining or retaining a good name, are leisure
and a conspicuous consumption of goods.
—Thorstein Veblen, The Theory of the Leisure
Class(1899, p 51)
In the middle ages, sumptuary laws specified in minute
detail what each social class was permitted and
forbid-den to wear, including the maximum price an article of
clothing could cost For example, grooms could not wear
cloth that exceeded two marks, and knights could wear
apparel up to six marks’ value but were forbidden from
wearing gold, ermine, or jeweled embroidery (Berry 1994)
The rationale was to reserve particular fabrics and
ornamen-tation for certain social classes to distinguish them and
uphold order within the social hierarchy A case in point
was the extravagant wardrobe of Elizabeth I (1533–1603),
which provided visible proof of her divinity and signaled
her special place in society (McKendrick, Brewer, and
Plumb 1983, p 76) By the eighteenth century, a blurring of
partitions in social classes led to the demise of all
sumptu-ary laws (Berry 1994, p 82); yet the use of personal effects
as markers of status persists
Today, anyone can own a purse, a watch, or a pair of shoes, but specific brands of purses, watches, and shoes are
a distinguishing feature for certain classes of consumers A woman who sports a Gucci “new britt” hobo bag ($695) signals something much different about her social standing than a woman carrying a Coach “ali signature” hobo ($268) The brand, displayed prominently on both, says it all Coach, known for introducing “accessible luxury” to the masses, does not compare in most people’s minds in price and prestige with Italian fashion house Gucci But what inferences are made regarding a woman seen carrying a Bottega Veneta hobo bag ($2,450)? Bottega Veneta’s explicit “no logo” strategy (bags have the brand badge on the inside) makes the purse unrecognizable to the casual observer and identifiable only to those “in the know.”
It is not uncommon for brands to mark their products differently to be more or less visible For example, Volvo wanted its newly introduced XC60 crossover “to be recog-nizable as a Volvo from twice the normal distance of 300 feet, so [the firm] added a larger insignia” (Vella 2008, p 17) (see Figure 1) We introduce a new construct, “brand prominence,” to reflect this variation in conspicuousness
We define brand prominence as the extent to which a prod-uct has visible markings that help ensure observers recog-nize the brand Manufacturers can produce a product with
“loud” or conspicuous branding or tone it down to “quiet”
or discreet branding to appeal to different types of con-sumers Compare the Gucci sunglasses in Figure 2 The first literally spells out the Gucci brand, while the second is far less explicit, using only the brand’s subtle but distinctive bamboo hinges
This research identifies the types of consumers who pre-fer loud versus quiet products and ofpre-fers an explanation for these differences Although a great deal of research exists
on the critical elements constituting a brand, from symbols
Trang 2and slogans (Aaker 1992) to the distinctiveness of a brand’s
physique (Kapferer 1992), little work (of which we are
aware) has examined the prominence of a brand’s
identify-ing marks on the product An exception is Wilcox, Kim, and
Sen (2009), who find that products without logos are less
apt to serve the social functions of expression and
self-presentation The construct of brand prominence clarifies
how the relative conspicuousness of a brand’s mark or logo
reflects different signaling intentions of the owner In short,
different consumers prefer quiet versus loud branding
because they want to associate themselves with and/or
dis-sociate themselves from different groups of consumers
We begin by proposing a taxonomy that assigns
con-sumers to one of four groups on the basis of two distinct
and measurable characteristics: wealth and need for status
According to the Pew Center for Research (Allen and
Dimock 2007), almost half of all Americans view their
country as being divided into two classes: the haves and the
have-nots Thus, first we divide consumers into the
rela-tively well-to-do and everyone else Dubois and Duquesne
(1993) find that the higher a person’s income, the greater is
that person’s propensity to purchase luxury goods; thus,
luxury goods manufacturers are most concerned with how
preferences vary among those who have more
Second, luxury goods are traditionally defined as goods such that the mere use or display of a particular branded product brings the owner prestige apart from any functional utility (Grossman and Shapiro 1988) Therefore, we account for individual differences in consumption-related need for status, defined as a “tendency to purchase goods and services for the status or social prestige value that they confer on their owners” (Eastman, Goldsmith, and Flynn
1999, p 41) As such, we further divide consumers accord-ing to the extent to which they seek to gain prestige by con-suming luxury goods In summary, the taxonomy divides consumers into four groups according to their financial means and the degree to which status consumption is a motivating force in their behavior
An essential insight that emerges from the taxonomy is how the four groups differ with respect to whom they seek
to associate with or dissociate from, which corresponds pre-dictably to their preferences for conspicuously or inconspic-uously branded luxury goods Consumers often choose brands as a result of their desire to associate with or resem-ble the typical brand user (Escalas and Bettman 2003, 2005) Furthermore, self-presentation concerns lead con-sumers to avoid choosing a product associated with a disso-ciative reference group (White and Dahl 2006, 2007) Asso-ciative and dissoAsso-ciative motives are not necessarily opposite
FIGURE 1 Volvo XC60 and Volvo XC90
FIGURE 2 Loud and Quiet Gucci Sunglasses
Trang 3sides of the same coin; a desire to associate with one group
does not imply a desire to dissociate from opposing groups
For example, a Harley-Davidson Riders Club member need
not abhor Suzuki or Kawasaki motorcycles or want to
dis-tance him- or herself from their owners We proceed by
labeling each of the four classes of consumers created by
the taxonomy and describing their signaling motives on the
basis of their desire to associate with and/or dissociate from
their own and the other three groups
For mnemonic reasons, we label the four groups as the
four Ps of luxury: patricians, parvenus, poseurs, and
prole-tarians We label the first category “patricians,” after the
elites in ancient Roman times Patricians possess significant
wealth and pay a premium for inconspicuously branded
products that serve as a horizontal signal to other patricians.
Feltovich, Harbaugh, and To (2002) use game theory to
argue that “high types” (i.e., those who are high in wealth,
productivity, or some other valued attribute) sometimes
avoid obvious signals that should separate them from low
types because they are concerned with separating
them-selves from medium types who use such signals In our
model, however, patricians are principally concerned with
associating with other patricians rather than dissociating
themselves from other classes of consumers They use
sub-tle signals because only other patricians can interpret them,
a byproduct of which is that they avoid being misconstrued
as someone who uses luxury brands to differentiate
them-selves from the masses In summary, patricians are high in
financial means, low in their need to consume for prestige’s
sake, and keen to associate with other patricians
We label the second category “parvenus” (from the
Latin pervenio–, meaning “arrive” or “reach”) Parvenus
pos-sess significant wealth but not the connoisseurship
neces-sary to interpret subtle signals, an element of which
Bour-dieu (1984) refers to as the “cultural capital” typically
associated with their station To parvenus, Louis Vuitton’s
distinctive “LV” monogram or the popular Damier canvas
pattern is synonymous with luxury because these markings
make it transparent that the handbag is beyond the reach of
those below them However, they are unlikely to recognize
the subtle details of a Hermès bag or Vacheron Constantin
watch or know their respective prices Parvenus are
afflu-ent—it is not that they cannot afford quieter goods—but
they crave status They are concerned first and foremost
with separating or dissociating themselves from the
have-nots while associating themselves with other haves, both
patricians and other parvenus
We call the third class of consumers “poseurs,” from the
French word for a “person who pretends to be what he or she
is not.” Like the parvenus, they are highly motivated to
con-sume for the sake of status However, poseurs do not
pos-sess the financial means to readily afford authentic luxury
goods Yet they want to associate themselves with those
they observe and recognize as having the financial means
(the parvenus) and dissociate themselves from other less
affluent people Thus, they are especially prone to buying
counterfeit luxury goods If brand status is important to a
person, as it is with poseurs, but is unattainable, a person is
likely to turn to counterfeit products as cheap substitutes for
the originals (Wee, Tan, and Cheok 1995) This implies, and
we subsequently show, that fake handbags should dispro-portionately be copies of luxury handbags that are conspic-uous or loud in displaying the brand—the kinds of goods the parvenus favor—but because of their discounted price are especially appealing to poseurs
We label the fourth class of consumer “proletarians,” a term commonly used to identify those from a lower social
or economic class, though we use it more narrowly to dis-tinguish less affluent consumers who are also less status conscious For the purposes of this study, proletarians are simply not driven to consume for the sake of status and either cannot or will not concern themselves with signaling
by using status goods They seek neither to associate with the upper crust nor to dissociate themselves from others of similarly humble means and neither favor nor spurn loud luxury Figure 3 provides a pictorial representation of the complete framework
We organize the remainder of this article follows: First,
we briefly summarize the relevant literature on status goods, signaling, and branding In Study 1, the analysis of market data reveals that, on average, inconspicuously branded luxury goods cost more than the same manufac-turer’s goods with more conspicuous branding This is con-sistent with patricians paying a premium for understate-ment In Study 2, we use market data again to show that counterfeiters tend to copy the lower-priced, louder, luxury variants within the product line of the brands they knock off, which appeal to poseurs seeking to emulate parvenus Study 3 is a field study; it demonstrates that only patricians can read subtle brand cues correctly Together with Study 1, Study 3 shows that patricians pay a premium for signals that only other patricians can decipher Study 4 shows that preferences between loud and quiet luxury goods differ pre-dictably among the four groups, corresponding to their social motives (i.e., the people each group wants to
associ-FIGURE 3 Signal Preference and Taxonomy Based on Wealth
and Need for Status
Patrician
Patricians signal to each other They use quiet signals.
Poseur
Poseurs aspire to be haves They mimic the parvenus.
Proletarian
Proletarians do not engage
in signaling.
Parvenu
Parvenus associate with other haves and want to dissociate themselves from have-nots They use loud signals.
Need for Status
Haves
Have-nots
Light arrows denote associations Dark arrows denote disassociations
Wealth
Trang 4ate themselves with and disassociate themselves from)
Fur-thermore, when provided the opportunity, poseurs tend to
be far more likely than parvenus to buy counterfeits, the
loud bags that appeal to these two groups We conclude by
discussing implications for managers and suggesting
avenues for further research
Status, Signaling, and Branding
Status has its roots in ancient society, in which every person
had a “place” in the social hierarchy Historically, this place
was attained either through birth (e.g., born into nobility or
an upper class in the caste system) or by ordainment (e.g.,
knighted by the king) This changed during the Age of
Enlightenment (roughly the beginning of the eighteenth
century) as a person’s worth began to be judged according
to his or her achievements, which frequently brought great
wealth (De Botton 2004) A reliable connection was made
between merit and worldly success; well-paid jobs were
secured primarily through intelligence and ability The rich
were not just wealthier; they were “better.” They merited
their success, and as such, affluence increasingly became a
marker of social status Wealth and social status have been
inextricably linked ever since
In his classic treatise The Theory of the Leisure Class
(1899), economist and sociologist Thorstein Veblen argues
thatthe accumulation of wealth is not really what confers
status Rather, what confers status is the evidence of wealth,
which requires its wasteful exhibition—behavior he
describes as “conspicuous consumption.” As examples,
Veblen notes that the leisure class used silverware,
hand-painted china, and high-priced table linens at meals when
less expensive substitutes could work as well or better
Members of this class bought fine silverware not to convey
food into their mouths but to display that they could afford
such things Veblen notes that the examples he put forth,
including manicured lawns, the latest fashions, and exotic
dog breeds, confer prestige to owners because of the items’
lofty price tags
Contemporary research in marketing recognizes the
symbolic role of possessions in consumers’ lives (Belk
1988; Levy 1959; Solomon 1983) It is widely accepted that
people make inferences about others on the basis of their
possessions (Belk, Bahn, and Mayer 1982; Burroughs,
Drews, and Hallman 1991; Richins 1994a, b) Furthermore,
Richins (1994a) points out that those inferences can reflect
others’ success, measured by the things someone owns The
objects that symbolize success tend to be high priced in
absolute terms or expensive relative to the average cost of
items in the product category (see also Fournier and Richins
1991) Charles, Hurst, and Roussanov (2007) argue that
sta-tus goods surface in highly visible categories in which
greater expenditures are generally associated with higher
income, such as cars (e.g., Bentley), fashion (e.g., Dior),
and jewelry (e.g., Tiffany & Co.)
Marketers understand that a common way to add “snob
appeal” to an otherwise pedestrian product is to attach a
high price (Eastman, Goldsmith, and Flynn 1999; O’Cass
and Frost 2002) Consumers will pay a higher price for a
functionally equivalent good because they crave the status
brought about by such material displays of wealth (Bagwell and Bernheim 1996) In some ways, higher prices them-selves make consumers feel superior as one of the few who can afford to buy the product (Garfein 1989) In this research, we take the view that a product’s or brand’s poten-tial to signal status through the use of a luxury good depends in large part on the observer’s ability to decipher the signal correctly, which, as we demonstrate in Study 3, equates to assessing the relative price of the good with some degree of accuracy
Although price connotes status, price itself does not determine the desirability of a status brand Brand choice can send meaningful social signals to other consumers about the type of person using that brand (Wernerfelt 1990) The symbolic meaning consumers derive from a particular brand is often based on associations between the brand and its users or the “type” of consumer who buys that brand (Muniz and O’Guinn 2001) Consumers are influenced by their own group (Bearden and Etzel 1982; Whittler and Spira 2002), those they aspire to be like (Escalas and Bettman 2003, 2005), and those with whom they want to avoid being associated (White and Dahl 2006, 2007) In other words, who uses a brand is integral to the brand image and helps explain why consumers are attracted to certain brands and shy away from others (Sirgy 1982)
The relationship between parvenus and poseurs reflects Veblen’s (1899) classic argument that members of a higher class consume conspicuous goods to dissociate themselves from the lower class (“invidious comparison”), while mem-bers of the lower class consume conspicuously to associate themselves with and be perceived as a member of the higher class (“pecuniary emulation”) Poseurs favor loud signals to mimic parvenus; they may stretch to buy a loud good, but in contrast to parvenus, they are prone to buy fake luxury goods We suggest that there is a group of haves who are less concerned with dissociation and more concerned with associating with their own kind They are the patricians, who pay a premium for subtly branded products only other patricians recognize We test this indirectly in Study 1 by offering empirical support for the notion that, on average, less conspicuously branded luxury goods offered by the same brand cost more
Study 1: The Relationship Between Brand Prominence and Price
In Study 1, we examine the relationship between price and brand prominence for three categories of luxury goods: designer handbags, luxury cars, and men’s shoes We focus first on designer handbags We chose this category in part because “handbags are the engine that drives luxury brands today” (Thomas 2007, p 168) Handbags had estimated sales of $7 billion in the United States alone in 2007 (Wil-son 2007), with the average American woman purchasing four handbags per year (Thomas 2007) In addition, purses
do not require sizing, as do shoes or prêt-à-porter (ready-to-wear fashion) The absence of sizes suggests that women have far more choices, and consequently handbags are a category in which manufacturers carry a large number of stockkeeping units For example, at any given time, Louis
Trang 5Vuitton (hereinafter we use LV) typically offers more than
200 different handbags but fewer than 20 different pairs of
men’s shoes Thus, we focus the analysis on the handbag
category but replicate the results using data in the men’s
shoe market (LV) and the car market (Mercedes-Benz),
albeit with much smaller data sets
If our premise is correct, we expect to observe a quieter,
more subtle brand identification on the more expensive
products and a louder, more conspicuous brand
identifica-tion on the relatively less expensive products Thus, we
pre-dict a negative correlation between price and brand
promi-nence—the extent to which the product advertises the brand
by displaying the mark in a more visible or conspicuous
manner (e.g., larger logos, repeat prints) We hypothesize
that for luxury goods, on average, as the price goes up,
brand prominence goes down
In January 2008, we downloaded information on all the
handbags offered by both LV and Gucci from the
compa-nies’ respective Web sites Louis Vuitton ($21.6 billion) and
Gucci ($8.2 billion) are first and second, respectively, in
Interbrand’s (2009) ranking of the leading luxury brands of
2008, and they are rated second and third, respectively, on
the Luxury Institute’s list of the most familiar luxury
hand-bag brands (see www.luxuryinstitute.com) The data
include pictures, price information, and product
descrip-tions for 236 bags from LV and 229 from Gucci that were
available online at the time The average price for an LV
handbag was $1,240 (Mdn = $1,090), and the average price
for a Gucci handbag was $1,448 (Mdn = $1,150) The range
spanned from $225 to $3,850 for LV and from $295 to
$9,690 for Gucci The data set does not include all purses
sold by LV or Gucci historically, but it is representative of
what was being sold by these firms in early 2008 Personal
discussions with Gucci and LV managers support our belief
that bags sold online do not constitute a skewed sample
Louis Vuitton’s selection online was reported to be identical
to what is sold in its stores (special offerings excluded) Gucci’s selection online is nearly identical, with the excep-tion of a few unique items offered through each channel
Method
We coded each handbag according to brand prominence and several control variables, such as the bags’ material and size Three categories of primary material were used to construct the purses: (1) fabric (e.g., denim, canvas), (2) leather, and (3) exotic hide (e.g., ostrich) We relied on the manufacturers’ dimensions of the bag as a proxy for surface area or the amount of material necessary to manufacture the bag
Our notion of brand prominence was intended to cap-ture how the different stockkeeping units varied in the extent to which they displayed the brand logo or identifying marks conspicuously to observers To this end, three inde-pendent judges rated each bag on a seven-point scale (anchored at the extremes by “not at all” and “a great deal”)
on the following criteria:
1 How prominently does this bag display its trademark? (A trademark is a distinctive name, symbol, motto, or emblem that identifies a product, service, or firm.)
2 To what extent would this bag be recognizable as a Gucci (LV) product?
Each judge was trained to recognize the standard identify-ing marks of the two brands (e.g., the classic green and red striped pattern originated by Guccio Gucci signifies Gucci) Intrarater reliability was high (for all three judges, Cron-bach’sα > 97) Interrater reliability was also high (across all pairs of raters, α > 9) Therefore, we combined the judges’ ratings into a composite measure of brand promi-nence ranging from “quiet” (1) to “loud” (7) (for an exam-ple, see Figure 4)
FIGURE 4 Quiet and Loud Gucci Bags
Gucci Handbag No 120 Average Loudness Rating = 7 Price: $640
Gucci Handbag No 170
Average Loudness Rating = 1
Price: $1,150
Trang 6The results appear in Table 1 Consistent with our
predic-tions, the most important findings are those for the variable
“prominence” (β = –122.26, p < 01) and for the interaction
between prominence and brand (β = 95.89, p < 01), such
that the slope for Gucci is –122.26 and that for LV is –26.37
(i.e., –122.26 + 95.89) The significant interaction indicates
that these slopes are different from each other The
interpre-tation is that, on average, an increase in brand prominence
of 1.0 on the seven-point scale equates to a $122.26
decrease in price for Gucci and a $26.27 decrease for LV
($856 and $185, respectively, when going from one extreme
to the other) In addition, as we expected, the grade of the
material matters There is also an interaction between
“sur-face” and “canvas,” such that large canvas bags are more
expensive than small ones, while this is not true for leather
and exotic bags
We replicated these results by examining the size of the
Mercedes emblem (i.e., the Mercedes “star”) on available
cars and sport-utility vehicles Assessing brand prominence
was straightforward; we used the size in centimeters of the
tri-star Mercedes logo displayed on the grill of the vehicles
We collected the data in January 2009, at which time
Mer-cedes offered 47 different models of vehicles, ranging from
two-door coupes to sport-utility vehicles (we did not
include the SLR in the analysis because it is cobranded with
McLaren) The vehicles ranged in price from $33,775 to
$199,825, and the emblem size ranged from 7.6 centimeters
to 18.5 centimeters
As in the study of handbags, the dependent variable was
the price of the car The independent variables included
brand prominence and a set of seven body-type dummies
(e.g., coupe, sedan, wagon) included to account for different
vehicles having different grill sizes and price points The
results reveal a significant overall effect of body type (F =
3.51, p < 01) and a significant main effect of emblem size
(β = –5215.58, F = 8.72, p < 01), such that an increase in
emblem size of one centimeter is associated with a decrease
in price of the car of slightly more than $5,000 In
sum-mary, if we control for body type, less expensive Mercedes
vehicles in the United States tend to boast a larger emblem
To support the generalizability of these results, it was
important to replicate the findings in a category catering
exclusively to men To this end, we usedLV’s 2009 men’s
shoe collection The collection comprises 13 different pairs
of shoes ranging in price from $485 to $1,170 Using pho-tos drawn from the company’s catalog and using the same scales, the same trained judges who rated the handbags rated brand prominence Price remained the dependent variable, while brand prominence and leather quality (three levels: calf, patent, and python) served as independent variables The results reveal a significant effect of leather
quality (F = 10.48, p < 01) and a main effect of brand
prominence (β = –43.90, F = 5.57, p < 05), such that when
we controlled for leather quality, an increase in brand prominence of 1 on the scale is associated with a decrease
in price of $43.90
Discussion
The data support the hypothesis that, on average, luxury brands Gucci and LV charge more for quieter handbags and shoes (i.e., those that display the brand less prominently) Similarly, Mercedes places larger emblems on its lower-priced cars, which is de facto evidence to suggest that people who purchase different classes of automobiles value brand prominence differently These results support the idea that there is a class of consumers that is willing to pay a premium for luxury goods that display the brand name less conspicuously (i.e., patricians) The policy of lowering price while making the brand name more prominent seems
to apply regardless of gender (men’s shoes, women’s hand-bags) and whether the category is considered more faddish (fashion goods) or durable (vehicles) In Study 2, we expand the scope of the investigation of marketplace phe-nomena by examining how the market for counterfeit lux-ury goods compares in terms of brand prominence
Study 2: Brand Prominence and
Counterfeit Goods
Counterfeits allow consumers to unbundle the status and quality attributes of luxury goods by paying less to acquire the status while not having to pay for the quality (Grossman and Shapiro 1988) Counterfeiters serve customers who aspire to own luxury goods but are unable or unwilling to pay for the real thing Among those of limited means in the framework, poseurs rather than proletarians crave the status associated with prestigious brands Furthermore, poseurs take their cues from the parvenus, who use signals that are easily decipherable, even to the uninitiated This implies that the counterfeit market should consist primarily of the louder handbags parvenus carry rather than the quieter handbags patricians carry Although there is no reason that counterfeiters cannot copy the pricier, quieter handbags as cheaply or easily as others in the manufacturer’s product line, we hypothesize that counterfeit goods tend to be copies of lower-priced, louder luxury goods because they are what poseurs demand
Method
To test the hypothesis, we combine the data collected on authentic handbags in Study 1 (handbags offered by LV and Gucci online in January 2008) with additional data from
TABLE 1 Study 1: Statistics for Relationship Between
Brand Prominence and Price
N = 417, R 2 = 54, F = 60.05
Trang 7two distinct sources First, we acquired a data set from
intellectual property enforcement officials who confiscated
counterfeit goods locally produced and sold in Thailand
Thailand is a manufacturing and distribution hub for fake
goods and, consequently, has been on the U.S Trade
Repre-sentative’s watch list for more than ten years The data set
contains pictures of 254 individual items that were
confis-cated as part of a raid on a manufacturer and seller of
coun-terfeit Gucci goods Therefore, the data are representative of
the Gucci knockoffs that an Asian counterfeiter would
pro-duce and distribute to U.S resellers (their Gucci knockoff
product line) Second, because these data contain
informa-tion only on Gucci, we augmented them with data from a
Web site specializing in the sale of counterfeit handbags
called knockoffbag.com From that Web site, we collected
data on all the handbags offered that were replicas of Gucci
and LV products There were 428 data points, 287 copies of
LV bags offered for sale, and 141 copies of Gucci bags
offered at the time we collected the data (April 2008) From
the Web site, we collected pictures of the goods offered
online, the price at which these counterfeit bags were
offered, and any other information the seller posted about
the goods Together, we have 682 data points representing
counterfeits of both Gucci and LV handbags The data
include the entire selection from a single producer and
dis-tributor (the Thai data) as well as individual items deemed
to be desirable and thus offered for sale on a popular Web
site This provides perspectives from both the producer’s
and the consumer’s vantage point
Not all the bags in the data on counterfeits are copies of
actual bags in the data set from Study 1; some are original
designs created by the counterfeiters to look like Gucci or
LV products Because these are fake bags with fake designs,
we refer to these as “fake-fakes.” Thus, the data can be
bro-ken down into different classes, as we show in Table 2
Counterfeiters copied 211 of the 465 existing styles (45%
of handbags were knocked off at least once) Counterfeiters
were responsible for another 386 fake-fakes (original
cre-ations) Therefore, there were 851 different styles of bags in
the data set (211 copies of current bags and 386 fake-fakes; the remaining 254 bags from LV and Gucci were not copied) Judges coded all the fake-fake bags in the exact same way as the authentic bags in Study 1 (correlation across judges for the composite measure was greater than 8)
Results
Table 3 summarizes the brand prominence (average rating) for the data in Studies 1 and 2 We analyzed the data using a
3 (type: original not copied, original copied, fake-fakes)× 2 (brand: LV, Gucci) analysis of variance We find significant
main effects of bag type (F = 53.48, p < 01) and brand (F = 4.37, p < 05) but no interaction between the two (F = 53,
p= 59) The analysis shows that counterfeiters choose to copy bags that are significantly louder than the ones they
do not copy (MLV_Copied = 5.41 versus MLV_Not Copied =
3.79, p < 01; MGucci_Copied= 5.50 versus MGucci Not Copied=
4.08, p < 01) Furthermore, when the counterfeiters create
their own variety of LV or Gucci bags (i.e., fake-fakes), their creations are also loud—on average, just as loud as the ones they copy (MLV_Copied= 5.41 versus MLV_Fake_Fake =
5.31, p = 71; MGucci_Copied= 5.50 versus MGucci Fake_Fake=
5.79, p = 30) These results support our hypothesis that
counterfeit handbags tend to be copies of the lower-priced, louder items in a luxury brand’s product portfolio
In Study 1, we found that brand prominence is nega-tively correlated with price Therefore, it might be argued that counterfeiters pick the products to counterfeit on the basis of price, not brand prominence To test whether brand prominence is the factor that drives counterfeiters’ decisions about which styles to copy, we examined the probability of original handbags being copied as a function of price, brand, and brand prominence In a first logistic regression (Columns 2 and 3 of Table 4), we include price and brand information but omit brand prominence In a second regres-sion (Columns 4 and 5 of Table 4), we include brand promi-nence information The results show that when price is taken
alone, the parameter is only marginally significant (p = 09),
TABLE 2 Study 2: Data Counts for Real and Counterfeit Gucci and LV Handbags
TABLE 3 Study 2: Brand Prominence for Real and Counterfeit Bags
a The average rating of “Copies” does not equal the average rating of the copied bags, because some bags were copied multiple times.
Trang 8and when brand prominence is added, the parameter for
price becomes nonsignificant (p > 5), while the parameter
for brand prominence is significant (p = 03) Furthermore,
there are no significant interactions between brand
promi-nence and price The results suggest that price is not the
decision variable for counterfeiters when deciding which
styles to copy With no discernible reference to price,
coun-terfeiters seem to produce and sell louder handbags As this
analysis indicates, the louder an original handbag, the more
likely it is to be knocked off by counterfeiters
The data we collected from knockoffbags.com included
price information for the counterfeit bags (we did not obtain
any price information on the confiscated bags from the
pro-ducer in Thailand) To examine how counterfeiters set
prices, we examined the relationship between the price of
counterfeit goods from knockoffbags.com and the price of
the bag as listed by the original manufacturer, the brand
prominence measure, and the brand (LV or Gucci) The
results (see Table 5) show that when counterfeiters choose
which styles of handbags to copy, they determine the price
of their offerings on the basis of the price charged by the
original manufacturer (β = 03, p < 01) In other words,
counterfeiters price their knockoffs higher for bags that sell
at higher prices by the original manufacturers regardless of
how loud the bag is (β = –.84, not significant) Although
counterfeiters limit themselves to selling relatively loud
bags, they subsequently set prices in accordance with the
original manufacturer’s product line
Discussion
In Study 2, we show that the handbags counterfeiters
choose to copy are the loud ones (i.e., their product line is
driven by brand prominence) These are the bags that
par-venus favor It appears that poseurs, who are the most inclined to buy the fakes, demand what the parvenus are showing off—namely, the loud handbags—in line with a desire to prominently associate themselves with this group
Study 3: Recognizing Subtle Brand
Cues
Our theorizing presumes that patricians are more attuned to the distinguishing traits of luxury goods and therefore can recognize products and their prices without the need for conspicuous brand displays In contrast, nonpatricians (par-venus, poseurs, and proletarians) cannot recognize the subtle cues and require loud signals to recognize a brand and the connotations of status If this is the case, patricians can use subtle cues to signal each other, while parvenus must use loud cues to dissociate from the poseurs and proletarians
In Study 3, we test this directly by studying the impact
of brand and brand prominence on signal recognition in relation to brand recognition and price knowledge among patricians and nonpatricians Patricians are expected to be more likely to recognize subtle brand cues than members of the other groups and therefore are less reliant on prominent brand placement to infer the relative price of a luxury hand-bag We expect nonpatricians to view prestige bags with prominent branding as more expensive than similar bags (i.e., same manufacturers costing as much or more) with subtle and, thus, unrecognizable brand cues Conversely, we expect patricians to correctly recognize these similar but subtly marked bags for the brand they are and, thus, to properly assess their relative prices
Method
Respondents Participants in this study were 120
con-sumers, comprising two groups of 60 survey respondents The first group was selected on the basis of the likelihood that members would qualify as patricians The marketing research firm Claritas (a division of ACNielsen) classifies zip codes according to demographic traits, lifestyle prefer-ences, and consumer behaviors The use of these Claritas profiles enabled us to select residents of the Palos Verdes Peninsula in Los Angeles County in Southern California to survey consumers Zip code 90274 had the highest concen-tration (95.42%) of segments that the firm identifies as
TABLE 4 Study 2: Brand Prominence Versus Price for Counterfeit Goods
Notes: LR = likelihood ratio.
TABLE 5 Study 2: Original Manufacturer’s Price and the
Price of Counterfeit Bags
Price of the original product 03 130.30 <.01
N = 228, R 2 = 48, F = 54.38
Trang 9“Upper Crusts,” “Blue Bloods,” and “Movers & Shakers”—
segments that best represent patricians (see Appendix A)
These segments comprised three of the highest-income
groups (the top 4.12% of U.S households) among the 66
segments Claritas uses to categorize consumers We
recog-nize that Movers & Shakers might straddle the boundary
between patricians and parvenus, but even if we ignore this
group, zip code 90274 still provides one of the highest
con-centrations of Upper Crusts and Blue Bloods nationally If
patricians want to associate with patricians, we would
expect to find them living close to each other as well
The second group was selected on the basis of
mem-bers’ geographic proximity to the first group (thus, we
con-trolled for factors such as weather, local fashion trends, and
so on) and the likelihood that they would not qualify as
patricians and thus could be considered parvenus, poseurs,
or proletarians They consisted of 60 people in Los Angeles
County from zip codes 91371 (Woodland Hills), 91601
(North Hollywood), and 91607 (Valley Village), areas
determined by means of the Claritas data to include
negligi-ble concentrations of the aforementioned groups (Upper
Crusts, Blue Bloods, and Movers & Shakers) Residents in
these zip codes were diverse and ranged from Money &
Brains (educated, well-to-do, and sophisticated) to
Bohemian Mix (upper-middle income, ethnically diverse,
early adopters) to Big City Blues (lower-middle income,
modest educations, ethnically diverse) Relying on
respon-dents who reside in these zip codes provided us a sample of
consumers who would stand little chance of qualifying as
patricians but were affluent enough to qualify as parvenus
Researchers who were blind to our theorizing were
con-tracted to survey residents from each selected area This
included, for example, visiting the upscale shopping district
known as the Promenade on the Peninsula, which services
four cities on the Palos Verdes Peninsula: Rolling Hills
Estates, Palos Verdes Estates, Rancho Palos Verdes, and
Rolling Hills Shoppers were prescreened to ensure that
they were residents of zip code 90274 Of those surveyed,
60 met the thresholds for age, education, and household
income regarding the segments that Claritas provided and
thus were included in the analysis as patricians The
researchers also went to a variety of shopping malls in the
San Fernando Valley area of Los Angeles (e.g., Westfield
Promenade in Woodland Hills) and collected similar data
from residents of zip codes 91371, 91601, and 91607
Stimuli and design Respondents were shown nine
designer handbags, six of which were the focal bags of
interest These six included three pairs of bags from the
individual luxury brands Chanel (most expensive), LV, and
Coach (least expensive) For each brand, we selected a bag
that was pretested to rate at the high end on the prominence
scale and one rated at the low end The remaining three
bags were inexpensive fillers (one Ralph Lauren, one
Kipling, and one Longchamp) For both LV and Coach, the
quiet handbag was more expensive than the loud handbag
For Chanel, the loud bag was more expensive and the most
expensive one in the set Although Coach’s position as a
luxury brand is hotly debated, we included this brand
because, at the time of the study, it was by far the market
leader in handbags and leather accessories in the United States (Hass 2008) and ranked first in the Luxury Institute’s
“Handbag Brands 2008” report that analyzed which of 26 brands luxury consumers are most familiar (Hall 2008)
In the first condition, pictures of these nine handbags were shown with the respective brand names printed below each image In the second condition, the brand names were removed, and the bags were shown without any additional information As mentioned previously, we ran this study on two distinct populations described as patricians and nonpa-tricians As such, the design was a 2 (class: patricians ver-sus nonpatricians) × 2 (brand prominence: loud versus quiet) × 2 (identification: brand names provided, brand names not provided) Class and identification varied between subjects, and brand prominence varied within sub-jects Respondents were asked to rank the nine handbags from most to least expensive
We predicted a three-way interaction such that brand prominence would elevate price perceptions (i.e., rankings) but only when the brand name was absent and respondents were not patricians Patricians should recognize the quieter prestige bags (the quiet Chanel, LV, and Coach purses in the set) for what they are even without the brand name present However, the brand serves as a cue regarding price to the nonpatricians Only when the brand names were present were the nonpatricians expected to recognize the quiet lux-ury bags for what they were and rank them appropriately Therefore, we expected the presence or absence of brand names to affect price rankings only for nonpatricians, who rely on overt branding as a signal
Recall that patricians are characterized by the typology according to their financial means (high) and need for status (low) In terms of a manipulation check, we expected the patricians to have a lower consumption-related need for sta-tus than the nonpatricians because patricians are not as con-cerned with differentiating themselves vertically from lower groups Respondents completed Eastman, Goldsmith, and Flynn’s (1999) need-for-status scale, which comprises state-ments such as “The status of a product is irrelevant to me” and “I would pay more for a product if it had status,” to which respondents indicated their level of agreement on a seven-point Likert scale With respect to financial means,
we relied on income as a proxy, asking respondents to report their annual household income on a six-item scale (i.e., under $59,999, $60,000–$99,999, $100,000–$139,999,
$140,000–$179,999, $180,000–$209,999, and $210,000+)
We also collected other demographic variables, such as age, race, and gender
Results
To test whether the screening of the sample of Palos Verdes Peninsula residents was effective, we first compared their need for status with the San Fernando Valley population As
we expected, those surveyed from zip code 90274 (i.e., patricians) had a lower need for status on the Eastman, Goldsmith, and Flynn (1999) scale (MPatricians= 3.59 versus
MNonpatricians = 4.51; F = 63.27, p < 01) For income, we
compared the average rank on the six-tiered scale across the two groups, such that a higher number corresponded to a higher income bracket (e.g., 6 = $210,000+) Patricians
Trang 10reported higher annual household incomes than
nonpatri-cians (MPatricians = 4.12 versus MNonpatricians = 2.15; F =
45.91, p < 01) Taken together, differences in need for
sta-tus and income enable us to contrast distinct groups of
con-sumers classified according to the typology as patricians
and nonpatricians
We analyzed the data using three separate analyses of
variance (one for each brand) with main effects for the type
of purse (quiet versus loud), the condition (brands versus no
brands), and the respondent type (patrician versus
nonpatri-cians) with the three two-way interactions and the three
three-way interactions The three-way interactions for LV
and Chanel were significant (pLV< 01, pChanel< 01); for
Coach, it was not significant (pCoach= 44) Most two-way
interactions (six of nine) were significant at p < 01; two
others were marginally significant (p = 07, p = 09) The
mean scores by population appear in Figure 5 In this graph,
the loud bags are depicted with bold lines, and the quiet
bags are depicted with thin lines
The pattern of results reveals that patricians are more
apt to recognize the true value of the bags we tested They
correctly rank-ordered the bags from most expensive to
least expensive and did so with or without explicit brand
names (none of the rankings differed significantly when
brand names were present or absent; for all bags, p > 3).
They even recognized correctly that the loud Chanel bag
was more expensive than the quiet one and that, for the LV
and Coach handbags, it was the opposite Thus, they were
not misled by the prominence of the brand names
In contrast, nonpatricians ranked all three loud bags
higher than the quiet bags when no brand names were
pre-sent When brand names were present, the quiet LV and
Chanel bags received a boost in rating, and the loud LV and
Coach bags fell in the ranking (all changes are significant at
p < 01), such that the quiet bags were rated higher than their loud counterpart (for LV and Chanel, differences are
significant at p < 01; for Coach, p = 06) These results are
substantively identical if we separate the wealthy respon-dents (income >$99,000) of the nonpatrician sample (21 respondents) from the other nonpatricians With a signifi-cantly higher need for status than the patricians (MPatricians= 3.59 versus MHigh-Income Nonpatricians = 4.46; F = 26.9, p <
.01), this group qualifies as parvenus Their rank-ordering
of the handbags is the same as the other nonpatricians (for
all six brands, p > 05), while it is different from the
rank-ings of the patricians Notably, the nonpatricians erro-neously rated the quiet Chanel bag as being more expensive than the loud one, while the patricians correctly rated the loud bag in this instance as more expensive
Given that the dependent variable was ordinal (rank) rather than interval and that the rank given to a bag by one person is not independent of the ranks he or she gives to the other bags (no two bags can be ranked first by the same per-son), we checked the robustness of the results using a series
of Kolmogorov–Smirnov tests We use these tests to com-pare the distribution of rankings for a single bag for a single group (i.e., within patricians or within nonpatricians) in the
no-brand versus brand-provided conditions The p-values
for each pairing appear in Figure 5 As expected, we find no change among patricians (their rankings did not change when the brand was present versus when it was not), while four of six change significantly when the brands were pre-sent for the nonpatricians This confirms that patricians do not need to be told the brand names of the bags to know their relative prices, while the nonpatricians significantly change their ordering when the brand names are revealed
FIGURE 5 Signal Recognition Among Patricians and Nonpatricians
No Brands 0
1
2
3
4
5
6
7
Nonpatricians
Patricians
Brands
Notes: p-values are derived from Kolmogorov–Smirnov tests between no brands and brands for each product.
Chanel loud
p = 39
p < 001
p = 98
p = 1.00
p = 24
p < 001
p < 001
p < 001
p = 1.00
p = 99
p = 97
p = 1.00
Chanel quiet
LV quiet
LV loud
Coach quiet Coach loud